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Will One-Year Medicaid Waiver Extensions Drive Debates over Expansion?

By Rebecca Adams, CQ HealthBeat Associate Editor

September 4, 2013 -- Negotiations over a potential expansion of Medicaid in Indiana can begin in earnest now that the Obama administration has granted Republican Gov. Mike Pence's request to keep a Medicaid program that waived federal rules in place for one year.

Obama administration officials would like Indiana to expand Medicaid to people whose income is up to 138 percent of the federal poverty line, as the health care law (PL 111-148, PL 111-152) allows. Pence, a former congressman, has held out the possibility that he would consider doing that if federal officials would let him keep operating the Medicaid program in his state the way that it has run under a waiver for the past few years. The waiver has allowed Indiana's Medicaid program to mirror high-deductible health plans and health savings accounts.

That waiver that allows Indiana to bypass some federal Medicaid rules was set to expire this year. But last week, the Centers for Medicare and Medicaid Services (CMS) announced that it would approve a one-year extension. It's unclear whether that and any other potential CMS concessions that could emerge will be enough to get the conservative Pence to join several other GOP governors in supporting an expansion. Michigan was the most recent state led by a Republican governor to pass legislation to allow the program to be broadened next year.

The announcement has implications beyond Indiana. A handful of other states—including Iowa, Oklahoma, and Utah—also have programs that are operating under waivers that will expire within the next few months.

"We may see a pattern start to develop with one-year extensions" for programs in those states, Joan Alker, executive director of the Georgetown University Center for Children and Families, said in an interview. Those potential extensions, if they occur, could add momentum to a push by advocates for Medicaid expansion.

"That will be a critical question: whether those Republican governors with expiring waivers really want to get coverage to their low-income citizens," Alker said.

Indiana Expansion

If Indiana were to expand Medicaid, the Urban Institute estimates that the state would gain more than $88 billion in federal matching grants over the next 10 years. The number of uninsured people in the state would be projected to decline by more than 56 percent during that same time.

Indiana's waiver was adjusted so that starting in January, people with incomes between 100 and 200 percent of the federal poverty level will get their coverage through the new marketplace instead of through the Indiana Medicaid program. Indiana elected not to create their own marketplace so these Medicaid recipients will get their coverage through the federal exchange.

It's essentially too late for Indiana to expand its Medicaid program in order to start the coverage in January, but advocates hope that the approval of the waiver will improve the chances for expansion in the future.

"We encourage all states to adopt the Medicaid funding made possible by the Affordable Care Act, which provides 100 percent federal funding for three years and never falls below 90 percent federal funding for people newly eligible for Medicaid," said CMS spokeswoman Emma Sandoe. "We look forward to working with Indiana and all other states in bringing a flexible, state-based approach to Medicaid coverage expansion and encourage the state to explore these options."

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